March 2014 - c3centricity | c3centricity

+41 79 93 39 789 info@c3centricity.com

Beginners Guide to Brand Portfolio Management

This week I want to share some ideas with you that were prompted by a client’s question. I was recently asked about brand portfolio management and what to do to ensure that a company is correctly differentiating its offers. This question was in reference to the service industry, which is arguably more challenging since there are no physical products, but the basic requirements remain the same.

Brand portfolio strategies are an essential prerequisite for the long-term success of multi-brand companies. It is vital for these organisations to consider not only external but also internal competitors.

According to marketing theory, there are two types of brand portfolio models, the house of brands and branded property. The House of Brands model refers to a portfolio where brands have different names across categories. Most of the major consumer goods companies use this model. The advantage of this model is that since the brands are independent, the failure of any single one of them has little impact on the others.

The Branded Property model uses one brand across all categories. Virgin is a good example of this, with its airline, media and train companies all being similarly identified. The advantage of this model is that positive images of one benefit all categories; however a negative publicity or event will also have a direct impact on all brands within the family.

Interestingly, both Unilever and P&G have been placing more emphasis on the company brand associated with their brands in recent years. This move followed a ruthless culling of both their portfolios of brands, from thous ands down to mere hundreds. The addition of the corporate name has come at a time of decreasing consumer trust in brands, which is certainly not helped by the growing adoption of private label, including those from discounters such as Lidl and Aldi.

Even though these two portfolio models exist, in reality firms tend to use components of both models together in their brand portfolio strategy.

For any company which has more than one or two brands, it is important to regularly review their portfolio strategy; here are some thoughts to help:

Two rules of portfolio creation

There are two basic principles for the design of a successful brand portfolio. The first is to maximise market coverage, so that no potential customers are being ignored. And second, to minimise the overlap between the company’s brands, so they aren’t directly competing with each other and trying to attract the same customers. If you can achieve both of these then your brand portfolio will have a solid foundation.

Identify the category

Surprisingly many don’t do this first essential step and end up with a sub-optimal strategy; let me explain why. Suppose you sell a carbonated soft drink and think you are in competition with other carbonated soft drinks. Consumers on the other h and see your brand as being in a larger category of soft drinks which also includes fresh fruit juices, because your product contains juice as well as being carbonated.

If you didn’t know this, you would not only miss out on identifying your true market potential, but may even alienate current users through inappropriate communications. It is essential to ask consumers about the category in which you are competing; a simple brand or pack sort is a great exercise for this.

Identify the category “need states”

Need states are the intersection between what customers want and how they satisfy this need. Although many marketers think about need states from time to time, most define their brands by consumer demographics or product attributes. This can lead to brand overlap and cannibalization.

Although the exercise of identifying needs states can be a challenge, the results can often identify new ways for existing brands to compete. It can identify “white spots” in the market as well as significant overlaps, even between brands from the same company, which is clearly undesirable. Once found, both situations can be addressed, offering the potential for significant growth, often without the need for new brand launches.

Identify the brand roles

Not all brands in your portfolio will be of equal value to the organisation. The Boston Consulting Group’s growth /share matrix is still one of the best and simplest tools for identifying those worth investing in, despite having been introduced as long ago as 1968. Since it is well-known and hopefully understood I won’t go into more detail here, but those interested in knowing more can read about it in a recent article by its creator Bruce Hendersen here.

Brand growth share matrix
Source: BCG Growth / Share Matrix

 

 

Differentiate your brands

Once the category and need states have been identified, and the current brand role is plotted, it is important to differentiate and communicate these differences to customers. Articulating each brand’s target market and value proposition will also support a review of future challenges and responses in advance of them happening.

Hopefully this short post has given you some food for thought on your own brand portfolio strategy. What you would add?

C3Centricity used images from Dreamstime and BCG in this post.

Marketing Information Lost in Translation: How to Save yourself & Rise above the Competition

A recent report I came across this week shows that 76% of marketers do not use behavioral information in either segmentation analysis or targeting. They have the data, they’re just not taking advantage of it to better identify and then satisfy their consumers. This shocked me, so I went looking for more information to clarify the situation. 

The study was conducted in late 2013 by Razorfish and Adobe amongst marketing and technology executives in the US, Canada, Germany, France and the UK. According to Pete Stein, CEO of Razorfish, the two main reasons for this lack of usage are firstly that today’s marketers are driving consumer segmentation with outdated technology, processes and tools, and secondly that there is an exponential growth in the availability of behavioral data.

In another study called “From Stretched to Strengthened” IBM reports that 71% of CMOs feel unprepared to h andle today’s “data explosion”. A third study, Domo‘s “2013 Data-driven marketing survey” found that two-thirds of marketers feel unable to h andle the volume of marketing data that’s available for analysis without feeling overwhelmed, and  concluded that there were five reasons why this is the case:

  • 69% don’t have the time to analyse it
  • 66% can’t see it integrated
  • 44% don’t have the time to collect it
  • 40% don’t have access across devices
  • 40% can’t see it in real time

These statistics suggest some interesting, no vital, changes that business intelligence / planning / market research / insight (BI) departments should make to address these needs of marketers. Once made, they would increase their perceived value and recognition, as well as that of the marketing department as well. Now that can’t be bad can it?

Here are my thoughts on each of them:

No time to analyse the data

I personally believe that if the support function (BI) was doing its job properly, marketing wouldn’t have to analyse the data. In fact I don’t think it is, nor should it be, their responsibility. Of course, this does mean that BI should be attributed with the appropriate levels of resources in both time and personnel to run the analyses and generate actionable insights.

Studies conducted every couple of years by the market research arm of the Corporate Executive Board (MREB), consistently show that world-class businesses have BI departments that have progressed from methodological experts to insight consultants, and then to knowledge synthesizers. Therefore unless you allow your team to develop in this direction, the onus for analysis will remain a challenge.

Can’t see the data integrated

Even before Big Data became a buzz word, companies have struggled to break down the internal silos of information ownership. The ever-increasing flow of data into organisations has just made the matter worse, so that it can no longer be ignored. Information integration may dem and a significant investment in both time and money, but the rewards are huge.

For example, from my own experience with clients, I have witnessed a grocery retailer increase sales by 15% whilst decreasing its promotional & discount allowances by 13%. This was achieved by simply making better use of the information they already had, and enabled them to make more relevant suggestions and offers to their customers. Airlines too are realising increased buy-in of their vacation and flight promotions, through more timely and relevant mailings to precisely segmented customer groups. That was only possible because they integrated the information from their different departments.

Don’t have time to collect the data

For me the problem is actually no longer simply not having the time to collect the data, but a rather subtle adaptation of our expectations to near real-time data availability today. We have all become less patient and this as true for the CEO, as it is for the CMO and on downwards.

Marketing must become more agile and flexible to be able to react to the latest data and adjust their actions and communications accordingly. Why continue to reward retailers with promotional pricing for items that are not flying off their shelves? The money could be better spent elsewhere, whether at a different retailer more aligned to the targeted segment, or even to another type of action.

Don’t have access across devices

Tablets set to outsell PCs in 2015It amazes me that so many people are still struggling to acknowledge that the PC is rapidly losing out to tablets. In fact, according to the International Data Corp. tablets will outsell PCs within the next year or so. IDC also says that while global smartphone sales in 2013 were up by 39% over 2012, they’re expected to grow by only around 19% this year.

However, as more smartphones get connected to cars as presented at the recent Geneva Car Show, marketers will be expecting to review their latest audience data or sales during their drive into work. It therefore makes sense to enable cross-device accessibility.

As an aside, I hope marketers also underst and what this trend means to their communication plans and how they connect with and engage their consumers.

Can’t see data in real time

With the never-ending flow of information into organisations it makes sense that marketers dem and to be able to look at the latest data in real time. Retail or audience data that is a month or even a few weeks out of date is of little use in this fast-paced world in which we live. Marketers will also expect market research to provide direct access to consumers and become less and less patient of studies that take weeks if not months to complete.

My conclusion from all of this is that the C-Suite needs to invest even more in data management for marketers and not only for the financial results to which they have become accustomed. They should not dem and the ROI of marketing without empowering marketers to be able to analyse the data available to them. What do you think?

C³Centricity used images from Microsoft and Mashable in this post.

8 Things CEOs might question about your Marketing Plan: And how to Answer them

All marketers create a marketing plan and work to achieve the growth mentioned in it. It takes a lot of time and effort to develop the plan, and even more to get it approved by management.

The annual parade of br and-plan presentations is a reality in most companies. Marketers all breathe a sigh of relief when it is over and they can get back to their beloved day jobs, that of supporting their br ands.

Worried marketer answering a marketing question

However, management doesn’t always allow a marketer to get off that easily. They can just as easily spring an “innocent” question when passing them in the corridor or socialising at a company event. If you can answer the CEOs question to their satisfaction, you will shine in their eyes. Provide an incomplete or worse still no answer, and they might wonder if it isn’t time to restructure the marketing group.


So, here are eight of the most likely questions a CEO may ask and how you should answer. NEVER say you don’t know, but also never drown them in a long-winded answer. Neither response will win you brownie points. Make sure you have an answer like those proposed below and your name might just be on the next list of promotions.

1. Who are our br and customers?

There is far more information needed than just age and gender, to answer this question. Prepare a short description (often called a persona) of a typical user, in the same way as you would describe a friend. See “13 Things your Boss Expects you to Know about your Customers” for further details on what you should already know about your customer.

ANSWER: Our customers are middle-aged women, whose children are in their late teens or early twenties. She shops in local supermarkets and gets advice from  friends on Facebook, about the best br ands to buy and what’s on offer. She’s been buying our br and for over two years because it satisfies her children’s hunger when they get in from playing sports. That makes them happy and she then feels proud of being a good Mum.

2. How much are our customers worth to us?

Marketing plan question about valueBesides having an average lifetime value in your head, you should also be able to provide information about your customers’ perceived value of your br and.

ANSWER: On average each customer spends about XXX (Dollars, Euros, Renminbi, Rupee, Real) each year on our br and, which is about YYY over ten years (lifetime value is rarely calculated further out than this). Our current average price in-store is ZZZ, but 70% of our customers thinks we’re actually worth more.

3. What return on our marketing budget are we getting?

Whilst ROI is not the best measure of marketing’s impact (see this Forbes article for more on that), you still need to answer the question. The answer to this could get very complex if you go into too much detail, so keep it simple. Say what your total budget is, how much you spend on advertising and promotions and what impact that has had on sales, in total. I know it takes a lot more than these two actions to impact sales, but as I said, keep it simple.

ANSWER: Our total budget is AAA of which BBB goes on communications and promotions. With our current sales growth of SSS, that works out at approximately TTT.

4. How much will we sell; what market share are we expecting this year?

You could give just one number in answer to this, but why not use the attention you’ve got by adding something impressive to the story?

ANSWER: We’re expecting a RRR% growth this year to UUU unit sales. This is the highest in the category so our share will increase by PPP points to MMM percent market share.

5. What are our innovation plans for the br and?

You could answer this with a long list of all the new SKUs you will launch but again use your time wisely by adding some underst anding too.

ANSWER: We will be launching CCC new variants, which we expect to add MMM percentage points to our market share. We will also be eliminating FFF units that are not delivering on expectations.

6. What do we know about our carbon footprint?

Marketing question about br and carbon footprint

Questions around sustainability and sourcing tend to be raised in corporations which already have targets. If this is the case in your own company, then measurements are almost certainly already being taken. Therefore you just need to reply with the latest numbers.

But you can again use this exchange with top management to add how your customers feel about the question and all the efforts being made by the company – you do have that information too don’t you?

7. How’s the competition doing?

The answer to this question could cover a lot of topics: sales, market share, new launches, advertising, promotions or pricing. Respond with a simple summary of a few current metrics in comparison to two or three major competitors. The manager will then clarify if he was thinking of a specific topic and you can answer more precisely.

8. How’s our distribution doing these days?

A simple summary of outlets we have gained or lost is enough here, but why not add some detail about successful placement improvements too? That latest shelf redesign that has increased sales, or the fact that you have just been named category captain in a retail chain is definitely news worth sharing.

These are just eight of the most common questions top management asks of marketers. As you can see, the answers I’ve suggested are short. Especially when the question is posed outside the formal marketing plan presentation, the executive is probably looking not only for the information requested, but also to check that you have an excellent underst anding of your br and. He wants to be assured that his business is in good h ands. Prove it to him and also show your respect of his time, by giving a short, precise, answer whenever possible.

Do you frequently get asked other questions that I have forgotten? Do let me know. If you also have a better way of responding to any of the above questions, I’d love to hear those too.

If you’d like your team to be better prepared for “awkward” questions from management, why not ask for a 1-Day Catalyst session on marketing KPIs? No obligation, just INSPIRATION!

C³Centricity used images from Microsoft and Dreamstime in this post.

NEVER Succeed at Innovation: 10 Mistakes even Great Companies make

There have been many attempts to dethrone the blond supermodel doll Barbie over her fifty plus years of existence, mostly without much success. The latest endeavour (named Lammilly, after her creator) is different in that Nickolay Lamm is going after co-funding and has already achieved over $350,000 in just a few days according to the website.

This interesting addition to the “Anti-Barbies” story prompted a number of questions in my head:

  • Is it wise to go after a declining segment?
  • What was wrong with Barbie’s customer satisfaction?
  • Who is the target for this new doll? Child, adult, collector?
  • Why now, after so many previous unsuccessful attempts at dethroning Barbie?

Those questions and various discussions on FaceBook then got me thinking more generally about innovation and how companies have adapted their processes (or not) to today’s connected world. So here are my thoughts on how NOT to innovate:

1. Change the colour, perfume or taste of your current product and then charge more.

Pepsi innovation of Crystal PepsiThis is what Pepsi did when launching Pepsi Crystal: it lasted less than a year. Interestingly this is also what Apple just did with its iPhone 5C, except it charged less. Again it is already being discounted at Walmart because of disappointing sales, which might just be a good thing for Apple in the long run. Sales of the 5S remain buoyant and any damage to the corporate image caused by the cheaper 5C should hopefully be significantly reduced.

2. Organise an innovation team and provide them with a separate office, ideally far away from the current business.

If this is how you are set up internally, get the team back into talking distance with the rest of the business. Rather than stimulating creativity as it has been claimed to do, by being separated from everyday business concerns, it actually alienates everyone else to innovation and decreases overall creativity.

3. Make sure R&D heads up innovation so your new products can make use of your technical know-how and skills.

R&D needs to connect with customers for improved innovationWhilst this may result in technically improved products, they are all too often not in line with consumer current needs or future desires. Your research people need to connect with your potential customers regularly so they can be tuned into customers’ wants and current frustrations. Wouldn’t you rather have your R&D developing new products that practically sold themselves? As Peter Drucker said “… know and underst and the customer so well the product or service fits him and sells itself” (>>Tweet this<<). If R&D are in constant contact with your customers, they will always have them in mind when planning their product development.

 

4. Don’t let people from outside the organisation work on innovation; prefer well-established thinkers from within the organisation, preferably with more than ten to twenty years in the company.

This often happens as the result of a naïve manager lacking the required confidence to accept criticism, to challenge the status quo and to get out of their comfort zone. No person, let alone an organisation, can be an expert in every area. Why not take full advantage of external expertise to catalyse innovation? It’s certainly faster than learning   and training the required new skills internally. Just think about how many major Fortune 500 companies have joint ventures: they know something about reaping the benefits of collaboration for a win-win to grow their businesses.

5. Only move an innovation concept forward when it is finalised and everyone in the company agrees with its potential.

Apple still excels at innovation

If you wait for complete agreement on a new concept, you will never launch any new product. Rather than looking for total buy-in from everyone, accept the proof of a well-documented justification; if it looks and feels right you can learn from in-market measurement once launched to make adjustments. This is the approach often used by many successful hi-tech companies including Apple. Become a beta tester but make sure you fail fast and learn fast (>>Tweet this<<).

 

6. Follow a well-tested established process for concept development. Take time to ensure everything is working perfectly before launching.

St andard innovation funnelRigid processes and creativity rarely go together (>>Tweet this<<). Rather than working step-by-step through a st andardised process every time, accept that your approach can and should be adapted to the concept as well as market needs.

Some argue that the more ideas you have the better the winning concept. I personally think that massive numbers of ideas merely dilute both thinking and action. I recommend working through a few potential “promising concepts” with some target customers, to refine and develop the winner. I have found this approach to lead more consistently to a winning concept that customers would buy, as well as far more quickly than any st andard funnel process of proliferation and elimination.

7.  Never use social media or test amongst consumers who are outside the control of the organisation, so competition doesn’t learn about what you are developing.

As with no. 4 above, this situation often arises from less experienced managers afraid of being found lacking in creativity. In reality, competition often knows far more about an organisation’s innovations than the majority of its employees do. Therefore test and learn, then test and learn some more, whilst of course making reasonable efforts to reduce any confidentiality risks involved.

8.  Never share ideas with anyone outside the innovation team to avoid leaks.

As mentioned in no. 2 above, everyone can be creative and have great, innovative ideas. It therefore makes no sense at all to limit accepted creativity to one team alone. Whilst it is important to have an innovation lead team, all employees should feel encouraged to bring their ideas to the attention of the business. After all, we are all consumers.

9. Only innovate products and services similar to those in which you are already an expert.

This is not innovation, this is renovation. As with no. 1 above, it is unlikely to provide significant growth for a business, but it can satisfy consumer dem ands for novelty until such time as your disruptive innovation is ready. Never accept renovations as a replacement for true innovation. (>>Tweet this<<)

10. Don’t think too far ahead; after all, the world is moving so fast that we don’t know what the future will look like.

Preparing future scenarios can speed innovation

Whilst it’s true that the world is moving forever faster, this actually makes forward thinking vital not impossible. My recommendation is to develop future scenarios to challenge the organisation to think through a number of “what if” scenarios so that the business is prepared for multiple opportunities and risks.

 

These are my ten mistakes that even the best companies make sometimes in innovation. Are you guilty of any of them? Hopefully these ideas will provide you with food for thought as well as possible solutions.

C³Centricity used images from Dreamstime, PepsiCo and Apple in this post.

The New Marketing Role: Testing & Tested

There have been many discussions lately about new marketing and how the function of the marketer has changed in recent years. The position has gone from a primarily creative role to one encompassing many new competencies.

As if that wasn’t difficult enough, marketing is also being challenged more and more to prove its ROI to the business, whilst at the same time being “forced” to get intimate with IT. These are very tough times for marketers. That is why I thought I would add my support and sympathy with a few ideas on how to make your life a little easier.

A/B Testing

Oreo's creative marketing at 2013 SuperBowl

It is no longer sufficient to publish great content on the web. Marketers are required to constantly challenge their own thinking and to improve what they are doing. A/B testing is now C/D/E and almost every other letter of the alphabet.

Great is no longer enough and anyway doesn’t stay great for long in the eyes of the customer. They are now (too) quickly losing their first positive impressions, accept as normal what was surprising just one week earlier and are soon off looking for something better.

 

IDEA: It is essential to work out a detailed plan of online activities, just like any other section of the marketing plan. Decide who will publish what and when, and make sure it aligns with and supports your offline events. Incorporate testing of content and headlines into your plans too, but always leave a little space and flexibility for topical content should something inspiring happen in the marketplace. Think Oreos at the 2013 SuperBowl.

Prepare to be challenged

Greenpeace marketing against P&G

Although I don’t know whether P&G were prepared for last week’s direct Greenpeace attack on their Head & Shoulders br and, it is not something they can easily ignore. After a similar attack on Nestle’s KitKat last year, it is clear that customers feel empowered to verbalise discontent in a ferocious manner. For this reason, it is vital to be prepared for as many possible eventualities as possible. This is where future scenario planning can be of immense support.

IDEA: Watch how other br ands are being called up short and consider what you would do if something similar happened to one of your br ands. Spend time studying societal trends (you are of course following them, aren’t you?) and then develop a few plausible future scenarios. The easiest way is probably to identify the two most important axes of uncertainty and then to describe each of the four worlds created. Review and agree what marketing and management would need to do in each of these situations.

Proving what you’re worth

Marketing has never been so closely scrutinised nor challenged as in recent years. The wealth of information being produced thanks to new technologies makes it arguably easier to measure activities than ever before. So marketing is being challenged by the business to prove its ROI. It is no longer acceptable to claim the lack of direct relationships between actions and outcomes, because of the wealth of data available.

IDEA: Review and agree with management the KPIs that you both consider to be indicators of marketing success. And then measure them, regularly if not permanently. Read this article for the top ten KPIs you should be following. Real-time information has become the new norm and although challenging at times, it does provide the advantage of the possibility for a quick response when things are not going according to plan.

Getting more comfortable with data

Marketing & IT need to be friends

It has never been a priority for marketing to befriend the IT department in their own organisation, but that time has come. But marketers need help in managing all the data available to them and for this they require systems and platforms. As was reported in a recent Domo report, the majority of marketers would work with data more often if they had the time and it was all in one place instead of dispersed across platforms.

IDEA: Work with IT to develop a system to provide easy access to the KPIs you’ve identified as of most relevance. Also develop dashboards that summarise all you activities on one page and into just a few, if not one single number – which management too will appreciate.

Get intimate with your customers

Just in case you haven’t heard, your customer is in control and that includes of your own marketing in many instances. From venting their dissatisfaction on social media, to boycotting your br ands when they don’t agree with your sustainability or sourcing efforts, today their voice is most definitely heard. If you still don’t have company objectives which include spending time with your customers then you need to set this up – urgently.

IDEA: Introduce your whole organisation to your customers and make sure you put them first in every single thing you and the company does. There are so many ways for people to get a better underst anding of their customers and rather than feeling you are losing control, you can lead the area and get additional recognition as a customer representative, rather than “just” a defender of br ands. That is in my opinion the only real future for marketing.

These are just five ways that marketing is being tested today and hopefully my ideas have inspired you enough to see this as an opportunity rather than as a threat. Let me know what you have introduced in your own organisation to meet these new challenges, or maybe others you yourself have faced; I’m sure everyone would love to learn from you.

C³Centricity used images from Microsoft, Forbes & Greenpeace in this post.

FREE DOWNLOAD “Secrets to Brand Building”

Everything You Need To Know To Improve Your Marketing & Brand Building

* indicates required